Led by Hungary’s forint, Central European currencies and government bonds retreated on Tuesday as the dollar resumed its spectacular rise against major currencies amid growing concerns that the US Fed will launch interest rate hikes in June instead of September as previously thought.
Illustrated by unusually large leaps of Hungarian sovereign yields on the secondary market, the pressure increased despite the ECB’s asset-propping QE which started on Monday, and despite of fresh Hungarian CPI data which showed deflation narrowed in February more than expected, suggesting that a rate cut by the National Bank of Hungary (MNB) all but flagged for the end of this month would not be steep.
Concorde Securities forecast on Tuesday that Hungary will cut its main interest rate by 10bps only in March to a new record low of 2.00%, with no commitment to further easing. The pace of the rate-cutting, if it continues, would be slow, it adds. Earlier, analysts penciled in rate cuts up to 60bps by summer.
Government bonds have been the most volatile in junk-rated Hungary in the past days.
Traders said a growing brokerage scandal also played into falls. The Hungarian central bank suspended the licence of brokerage Quaestor on Tuesday, the third victim of a regulatory clampdown within two weeks.
The forint traded at 287.06 to the dollar, down from 281.56 late Monday. On Tuesday, it moved between 281.80 and 288.05, a new 13-year trough.
It was quoted at 287.64 to the Swiss franc, down from 285.58 late Monday. Its range on Tuesday was 284.98 to 289.67, a three-week low. Since its crash to an all-time low at 378.49 on January 15 when the Swiss central bank scrapped its cap of 1.20 to the euro, it reached the highest at 281.07 on February 26.
Producing journalism that is worthy of the name is a costly business. For over 30 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.
